An Application of the Frontier Price Concept in Spatial Equilibrium Analysis

The objective of this paper is to demonstrate the usefulness of the concept and method of the frontier price curve which has received little attention in the field of spatial economics. A number of problems are solved using this method. First, the characteristics of representative spatial free-entry solutions can be differentiated in a clear and rational way. Secondly, the link between the social welfare levels and all the spatial solution s is now simply explained, and a welfare-maximising equilibrium solution can be easily obtained. Finally, a decrease in the freight rate has an interesting, unconventional effect of expanding the market area.